Building a Workforce for the Information Economy

Committee on Workforce Needs in Information Technology

Computer Science and Telecommunications Board

Board on Testing and Assessment

Board on Science, Technology, and Economic Policy

Office of Scientific and Engineering Personnel

National Research Council

NATIONAL ACADEMY PRESS
Washington, D.C.



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Building a Workforce for the Information Economy Building a Workforce for the Information Economy Committee on Workforce Needs in Information Technology Computer Science and Telecommunications Board Board on Testing and Assessment Board on Science, Technology, and Economic Policy Office of Scientific and Engineering Personnel National Research Council NATIONAL ACADEMY PRESS Washington, D.C.

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Building a Workforce for the Information Economy NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. Support for this project was provided by the National Science Foundation under Sponsor Award Number SRS-9908384 and the National Aeronautics and Space Administration under Contract Number NASW-99037-Task 103. Any opinions, findings, conclusions, or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of the sponsors. Library of Congress Cataloging-in-Publication Data National Research Council (U.S.). Committee on Workforce Needs in Information Technology. Building a workforce for the information economy / Committee on Workforce Needs in Information Technology, Computer Science and Telecommunications Board, Board on Testing and Assessment, Board on Science, Technology, and Economic Policy, Office of Scientific and Engineering Personnel, National Research Council. p. cm. Includes index. ISBN 0-309-06993-9 (perfect binding) 1. Information technology--Vocational guidance. I. Title. T58.5 .N379 2000 331.7'61004'0973--dc21 00-012827 Additional copies of this report are available from: National Academy Press 2101 Constitution Avenue, NW Box 285 Washington, DC 20055 800/624-6242 202/334-3313 (in the Washington metropolitan area) http://www.nap.edu Copyright 2001 by the National Academy of Sciences. All rights reserved. Printed in the United States of America

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Building a Workforce for the Information Economy THE NATIONAL ACADEMIES National Academy of Sciences National Academy of Engineering Institute of Medicine National Research Council The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Bruce M. Alberts is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. William A. Wulf is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, upon its own initiative, to identify issues of medical care, research, and education. Dr. Kenneth I. Shine is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Bruce M. Alberts and Dr. William A. Wulf are chairman and vice chairman, respectively, of the National Research Council.

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Building a Workforce for the Information Economy COMMITTEE ON WORKFORCE NEEDS IN INFORMATION TECHNOLOGY ALAN G. MERTEN, George Mason University, Chair BURT BARNOW, Johns Hopkins University, Vice Chair EILEEN APPELBAUM, Economic Policy Institute SARAH KUHN, University of Massachusetts, Lowell JOEL MOSES, Massachusetts Institute of Technology PATRICIA MURRAY, Intel Corporation JAMES L. OUTTZ, Outtz and Associates ROY RADNER, New York University CECILIA E. ROUSE, Princeton University IRA RUBINSTEIN, Microsoft Corporation PETER SAFLUND, Northwest Center for Emerging Technologies JAN SCHULTZ, IDX Corporation JOSEPH SMIALOWSKI, * Bank Boston ERIC TOMLINSON, The Scientific World Inc. ERNST VOLGENAU, SRA International Inc. HELEN M. WOOD, National Oceanic and Atmospheric Administration and IEEE Computer Society Staff HERBERT S. LIN (CSTB), Study Director MARJORY S. BLUMENTHAL (CSTB) GAIL PRITCHARD (CSTB) MARGARET MARSH (CSTB) CHARLOTTE KUH (OSEP) PETER HENDERSON (OSEP) JIM VOYTUK (OSEP) MARGARET L. HILTON (BOTA) STEPHEN A. MERRILL (STEP) PHILIP ASPDEN (STEP) * Resigned from the committee in November 1999.

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Building a Workforce for the Information Economy COMPUTER SCIENCE AND TELECOMMUNICATIONS BOARD DAVID D. CLARK, Massachusetts Institute of Technology, Chair DAVID BORTH, Motorola Labs JAMES CHIDDIX, Time Warner Cable JOHN M. CIOFFI, Stanford University ELAINE COHEN, University of Utah W. BRUCE CROFT, University of Massachusetts, Amherst SUSAN L. GRAHAM, University of California, Berkeley JUDITH HEMPEL, University of California, San Francisco JEFFREY M. JAFFE, IBM Corporation ANNA KARLIN, University of Washington MICHAEL KATZ, University of California, Berkeley BUTLER W. LAMPSON, Microsoft Corporation EDWARD D. LAZOWSKA, University of Washington DAVID LIDDLE, U.S. Venture Partners TOM M. MITCHELL, WhizBang! Labs Inc. DAVID A. PATTERSON, University of California, Berkeley HENRY (HANK) PERRITT, Illinois Institute of Technology CHARLES SIMONYI, Microsoft Corporation BURTON SMITH, Cray Inc. TERRY SMITH, University of California, Santa Barbara LEE SPROULL, New York University MARJORY S. BLUMENTHAL, Director HERBERT S. LIN, Senior Scientist JERRY R. SHEEHAN, Senior Program Officer ALAN S. INOUYE, Senior Program Officer JON EISENBERG, Senior Program Officer GAIL PRITCHARD, Program Officer LYNETTE MILLETT, Program Officer JANET BRISCOE, Administrative Officer DAVID DRAKE, Project Assistant DANIEL LLATA, Senior Project Assistant MARGARET MARSH, Senior Project Assistant DAVID PADGHAM, Research Assistant MICKELLE RODRIGUEZ, Senior Project Assistant SUZANNE OSSA, Senior Project Assistant BRANDYE WILLIAMS, Office Assistant

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Building a Workforce for the Information Economy BOARD ON TESTING AND ASSESSMENT ROBERT L. LINN, University of Colorado, Boulder, Chair CARL F. KAESTLE, Brown University, Vice Chair RICHARD C. ATKINSON, University of California CHRISTOPHER F. EDLEY, JR., Harvard University RONALD FERGUSON, Harvard University MILTON D. HAKEL, Bowling Green State University ROBERT M. HAUSER, University of Wisconsin, Madison PAUL W. HOLLAND, Educational Testing Service RICHARD M. JAEGER, University of North Carolina, Greensboro DANIEL M. KORETZ, RAND, Arlington, Virginia RICHARD LIGHT, Harvard University LORRAINE McDONNELL, University of California, Santa Barbara BARBARA M. MEANS, SRI International ANDREW C. PORTER, University of Wisconsin, Madison LORRIE SHEPARD, University of Colorado, Boulder CATHERINE E. SNOW, Harvard University WILLIAM L. TAYLOR, Attorney at Law, Washington, D.C. WILLIAM T. TRENT, University of Illinois at Urbana-Champaign GUADALUPE VALDES, Stanford University VICKI VANDAVEER, The Vandaveer Group Inc. LAURESS L. WISE, Human Resources Research Organization KENNETH I. WOLPIN, University of Pennsylvania MICHAEL J. FEUER, Director MARGARET L. HILTON, Program Officer LISA D. ALSTON, Administrative Associate M. JANE PHILLIPS, Senior Project Assistant

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Building a Workforce for the Information Economy BOARD ON SCIENCE, TECHNOLOGY, AND ECONOMIC POLICY DALE JORGENSON, Harvard University, Chair WILLIAM SPENCER, The Washington Advisory Group, Vice Chair M. KATHY BEHRENS, Robertson Stephens Investment Management VINTON G. CERF, MCI WorldCom BRONWYN HALL, University of California, Berkeley JAMES HECKMAN, University of Chicago RALPH LANDAU, Stanford University RICHARD LEVIN, Yale University DAVID MORGANTHALER, Morganthaler Ventures MARK MYERS, Xerox Corporation ROGER NOLL, Stanford University EDWARD E. PENHOET, University of California, Berkeley WILLIAM RADUCHEL, America Online ALAN WM. WOLFF, Dewey Ballantine Ex Officio BRUCE ALBERTS, National Academy of Sciences WILLIAM A. WULF, National Academy of Engineering KENNETH I. SHINE, Institute of Medicine GERALD DINNEEN, National Research Council STEPHEN A. MERRILL, Executive Director PHILIP ASPDEN, Senior Program Officer

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Building a Workforce for the Information Economy OFFICE OF SCIENTIFIC AND ENGINEERING PERSONNEL M.R.C. GREENWOOD, University of California, Santa Cruz, Chair JOHN D. WILEY, University of Wisconsin, Madison, Co-Chair KENNETH J. ARROW, Stanford University RONALD G. EHRENBERG, Cornell University CARLOS GUTIERREZ, California State University, Los Angeles NANCY B. JACKSON, Sandia National Laboratories DONALD JOHNSON, Grain Processing Corporation MARTHA A. KREBS, Institute for Defense Analyses STEPHEN J. LUKASIK, Independent Consultant CLAUDIA I. MITCHELL-KERNAN, University of California, Los Angeles MICHAEL T. NETTLES, University of Michigan, Ann Arbor DEBRA W. STEWART, North Carolina State University TADATAKA YAMADA, SmithKline Beecham Pharmaceuticals A. THOMAS YOUNG, Lockheed Martin Corporation (retired) Ex Officio ROBERT C. RICHARDSON, CHARLOTTE KUH, Executive Director MARILYN J. BAKER, Associate Executive Director JIM VOYTUK, Senior Program Officer PETER HENDERSON, Senior Program Officer

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Building a Workforce for the Information Economy Preface BACKGROUND In the spring of 1998, Congress conducted hearings on the needs of U.S. industry for high-technology workers. A primary impetus for these hearings was the insistence of information technology industry representatives that companies were unable to recruit sufficient domestic workers and needed to hire additional non-U.S. citizens. Several recent studies supported the industry position. Most notably, a 1997 Information Technology Association of America (ITAA) study estimated a shortage of 340,000 workers in the field of information technology.1 In September of 1997 the Department of Commerce released a report concluding that there was a shortage of information technology workers. 2 This conclusion was based on projections from the Bureau of Labor Statistics that the United States would require more than 1 million additional information technology workers between 1994 and 2005, compared to the small number of U.S. bachelor's degrees in computer and information sciences awarded annually (24,553 in 1994). In response to the perceived shortage of high-technology workers, bills were introduced in both the House and Senate (H.R. 3736, S. 1723) to 1   Information Technology Association of America. 1998. Help Wanted: 1998: A Call for Collaborative Action for the New Millennium. Arlington, Va.: ITAA. 2   Department of Commerce. 1997. America's New Deficit: The Shortage of Information Technology Workers. Washington, D.C., September.

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Building a Workforce for the Information Economy units involved: the Board on Testing and Assessment, the Board on Science, Technology, and Economic Policy, and the Office of Scientific and Engineering Personnel. NRC staff assisted and, at critical times, guided the committee in many ways. They provided essential insight into the NRC process and resources. They organized the regional site visits, arranged for briefings, and handled logistical matters for the committee with the utmost skill and patience. They provided research support to the committee, including a number of data analyses that were critical to the analytical content of the report. They facilitated numerous contacts with outside sources of expertise and content. The issues addressed by the committee were wide-ranging. Any one issue or discussion could involve technical, political, social, ethical, educational, and human resource matters, among others. Similarly, the perspectives and biases of the committee were equally diverse, as were those of the intended audience. Herb Lin, senior scientist for CSTB and the study director for this project, turned discussions, individual ideas, and points of agreement and of initial disagreement into this important report. He crafted meeting agendas in such a way that the committee received the proper amount of diverse external input and had sufficient time to develop its conclusions and recommendations. This study could not have been carried out nor this report written without Herb. The committee is deeply indebted to him. Finally, the assistance of Bill Spencer (Sematech), William Eddy (Carnegie Mellon University), Stephen J. Lukasik (SAIC), and John Kreick in the launch of this project is appreciated.

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Building a Workforce for the Information Economy Acknowledgment of Reviewers This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with procedures approved by the NRC's Report Review Committee. The purpose of this independent review is to provide candid and critical comments that will assist the institution in making its published report as sound as possible and to ensure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. We wish to thank the following individuals for their review of this report: Tom Bailey, Columbia University, Libby Bishop, WestEd, Scott Bradner, Harvard University, Henry Braun, Educational Testing Service, Richard Fonte, Austin Community College, John Glaser, Healthcare Systems, James Heckman, University of Chicago, Ken Kennedy, Rice University, Henry Lichstein, Citibank, Deborah Malamud, University of Michigan, Ray Marshall, University of Texas, Austin, Demetrios Papademetriou, Carnegie Endowment for International Peace, Robert Prince, Anderson Consulting,

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Building a Workforce for the Information Economy Wolfgang Sadee, University of California, San Francisco, Paula Stephan, Georgia State University, Robert Weatherall, Massachusetts Institute of Technology, Alan Wolff, Dewey Ballantine Law Office, and Stephen Yale-Loehr, True, Walsh & Miller and Cornell University. Although the reviewers listed above have provided many constructive comments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Stephen J. Lukasik, appointed by the Commission on Physical Sciences, Mathematics, and Applications, and Samuel H. Preston, appointed by the Report Review Committee, who were responsible for making certain that an independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of this report rests entirely with the authoring committee and the institution.

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Building a Workforce for the Information Economy Contents     Executive Summary   1     Part I       1  The IT Sector: Context and Character   23     1.1  The Trajectory of Information Technology,   23     1.2  As Goes IT, So Goes the IT Workforce,   24     1.3  Why Has Information Technology Captured So Much Attention?,   28     1.3.1  Flourishing of the IT Sector,   29     1.3.2  Rise of the High-Technology Sector,   32     1.3.3  Enabler of Broad Economic Change,   35     1.3.4  IT as a Policy Driver,   38     1.4  Why Assess IT Workforce Issues Now?,   40     1.5  Organization of This Report,   42     2  Understanding the IT Workforce   44     2.1  Who Is an IT Worker?,   44     2.2  The Nature of IT Work,   47     2.2.1  Category 1 Work,   47     2.2.2  Category 2 Work,   49     2.2.3  The Interaction Between Category 1 and Category 2 Work,   49     2.2.4  Category 1 and Category 2 Workers,   51

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Building a Workforce for the Information Economy     2.3  Intellectual and Knowledge Requirements,   54     2.3.1  Formal Education and Type of IT Work,   54     2.3.2  Core Knowledge and Abilities for IT Work,   55     2.3.3  The Role of Experience and Situated Learning and Knowledge,   56     2.4  Characterizing the IT Workforce,   60     2.4.1  Size of the IT Workforce,   60     2.4.2  Growth in the Category 1 IT Workforce,   61     2.4.3  Demographics of the Category 1 IT Workforce,   66     2.4.4  Compensation in the Category 1 IT Workforce,   68     2.4.5  Educational Background,   79     2.4.6  Distribution of Category 1 IT Workers by Size of Employer,   83     2.4.7  Unemployment of Category 1 IT Workers,   84     2.4.8  A Note About the Hardware Subsector Within Information Technology,   84     2.4.9  Characteristics of the Category 2 IT Workforce,   85     2.5  Recap,   90     3  Characterizing the Workforce Problem   92     3.1  Framing the Problem in Context,   92     3.2  Reports of Difficulty in Hiring,   92     3.3  The Inference of a Worker Shortage,   97     3.3.1  The Overall Labor Market,   99     3.3.2  The Size of the Applicant Pool,   99     3.3.3  Skills Shortages Versus Worker Shortages,   102     3.3.4  Compensation,   102     3.3.5  Time to Reach Equilibrium,   107     3.4  The Committee's View of the IT Labor Market,   109     3.5  Segmentation of Demand for IT Workers,   110     3.6  A Perspective on the Federal Government and Workforce Issues in IT,   113     3.6.1  Competition with the Private Sector,   113     3.6.2  Incentives,   114     3.6.3  Recruitment and Retention Issues,   116     3.6.4  Coping with Tightness,   116     3.6.5  Security,   117     3.6.6  Concerns Expressed by Government Contractors,   118     3.7  Projections for the Future,   119     3.7.1  The Relevant Time Horizons,   119     3.7.2  The Quantitative Outlook,   120     3.7.3  Skills for the Future,   122

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Building a Workforce for the Information Economy     3.7.4  Project-based Employment,   123     3.7.5  Reducing Relative Needs for Personnel Through Tools and Techniques for Greater Productivity,   126     3.8  Recap,   131     Part II       4  Older IT Workers and Possible Age-Related Discrimination   135     4.1  Introduction,   135     4.2  Legal Dimensions of Age Discrimination,   136     4.2.1  The Definition of Age Discrimination,   136     4.2.2  Legal Theories for Showing Age Discrimination,   137     4.3  The Empirical Evidence on the Labor Market Experiences of Older and Younger IT Workers,   139     4.3.1  Data from the Equal Employment Opportunity Commission,   139     4.3.2  Labor Market Survey Data from the Bureau of Labor Statistics,   140     4.3.3  The AARP Audit Study,   146     4.4  Discussion,   148     4.5  Recap,   149     5  Foreign Workers in the IT Workforce   152     5.1  The Impact of Foreign Workers on the U.S. Economy and Workforce,   152     5.2  Foreign Workers in the United States,   156     5.2.1  Foreign Workers Overall,   156     5.2.2  Foreign Worker Programs,   157     5.2.3  Issues Regarding the Foreign Worker Programs,   170     5.3  Availability of Foreign IT Workers to U.S. Firms,   177     5.3.1  Competition for Foreign Workers,   178     5.3.2  Locating IT Work Abroad,   179     5.4  Interaction Between the Use of Foreign Workers and Locating Work Offshore,   185     5.5  Recap,   186     6  Making More Effective Use of the Existing IT Workforce   188     6.1  Attracting and Using IT Workers More Efficiently,   188     6.1.1  Increased Use of Overtime,   189     6.1.2  Improved Recruitment and Retention,   194     6.1.3  Making Clearer Distinctions Between Essential and Optional Attributes,   199

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Building a Workforce for the Information Economy     6.2  Expanding the Pool of Immediately Available Workers,   201     6.2.1  The Role of Assessment,   201     6.2.2  Targeting Underrepresented Groups for IT Careers,   212     6.3  Recap,   216     7  Longer-Term Strategies for Increasing the Supply of Qualified Labor: Training and Education   220     7.1  The Role of Formal Education,   220     7.1.1  Secondary Education,   221     7.1.2  Higher Education—Baccalaureate,   228     7.1.3  Higher Education—Postbaccalaureate,   240     7.1.4  Higher Education—Community Colleges,   245     7.1.5  Industry Certification,   251     7.1.6  Distance Learning,   253     7.2  Training IT Workers,   254     7.2.1  The Need for Lifelong Learning,   254     7.2.2  Disincentives for Employer-provided Formal Training,   255     7.2.3  Other Factors Affecting Training,   257     7.2.4  Support and Infrastructure for Training,   258     7.2.5  Training Opportunities in the Economy and in High Technology,   260     7.2.6  Training Realities,   261     7.2.7  Historical Experiences in Training,   264     7.2.8  Approaches to Shared Training,   266     7.3  Integrating Work and Learning,   268     7.4  Recap,   270     Part III       8  Synthesis, Principles, and Recommendations   275     8.1  Synthesis and Findings,   275     8.1.1  On the Available Data,   278     8.1.2  On the Nature of Business in the IT Sector (Chapter 3),   279     8.1.3  On the Assessment of Talent (Chapter 6),   280     8.1.4  On Education and Training (Chapter 7),   280     8.1.5  On Age Discrimination (Chapter 4),   281     8.1.6  On the Use of Foreign Labor (Chapter 5),   282     8.1.7  On the Use of Temporary Foreign Nonimmigrant Labor (Chapter 5),   283

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Building a Workforce for the Information Economy     8.1.8  On Workforce Needs in Biotechnology as a Point of Contrast and Comparison,   283     8.2  Principles for Action,   284     8.3  Recommendations,   285     8.3.1  For Employers of IT Workers,   287     8.3.2  For Educational Institutions,   291     8.3.3  For Individual Workers,   296     8.3.4  For Government Policymakers,   297     8.3.5  For the Federal Government as a Major User of IT,   307     8.3.6  For Joint Action,   311     Appendixes       A  Biotechnology,   317     B  Estimating the Size of the IT Workforce,   331     C  Study Committee Biographies,   344     D  Briefers to the Committee,   351     Index   357

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Building a Workforce for the Information Economy For every complex problem, there is a solution that is neat, simple, and wrong. —H.L. Mencken

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